Is too much of Oracle chief executive Larry Ellison a bad thing? Wall Street sure seems to think so. Investors have used the departure of Oracle chief operating officer Ray Lane as an excuse to cash in shares of the pricey tech titan.

In a terse statement ahead of a long weekend, Oracle announced Lane was departing as the company's operating chief. Lane will remain on Oracle's board of directors, and the split was amicable. Ellison will assume Lane's role, but not the title. A spokeswoman for Oracle said the company hasn't named a direct replacement. "Nothing has been announced," she said.

The translation: Ellison is more immersed in Oracle's day-to-day operations than ever -- and that's bad news to some investors. Analysts are already split on Lane's departure, which has been rumored for months. Shares of Oracle have fallen about 16 percent since Lane resignation was announced.

Wall Street is worried that Ellison will pump up expectations and not deliver, take too many risks and fail to run a tight ship. Oracle is running smoothly, and Wall Street wants to make sure it stays on course. Last week's trashgate debacle with Microsoft was just one example of the risks Ellison will take.

On Wednesday, JP Morgan cut the stock to "market performer" from "buy", partially because of Lane's departure. JP Morgan analyst William Epifanio said in a research note that Lane's resignation is "extremely negative" news for the company. Lane has been credited with making Oracle more efficient and providing "an important balance to Larry Ellison's management style".

Meanwhile, CS First Boston reiterated a "strong buy" and played down the concerns about the void left by Lane. Get used to the debate among analysts. Plenty of analysts are still mulling over the meaning of Lane's departure.

When a stock is priced to perfection -- 88 times estimated fiscal 2001 earnings, and 73 times 2002 earnings, according to JP Morgan -- you can't just shrug over Lane's departure. JP Morgan argued that the best of Oracle's upside surprises are behind it.

Just a few weeks ago, Oracle creamed estimates with fourth quarter earnings of 31 cents a share on sales of $3.4bn. The first quarter also looks great. The big question is whether Oracle has peaked.

Lane, who joined Oracle in 1992, was one of the guys who guided Wall Street in the right direction and made Oracle more efficient. Ellison rants about the competition and talks up Oracle's prospects at every turn, but can pump up expectations too much.

After the company's latest upside surprise, Ellison compared Oracle to Microsoft. Oracle could dominate business-to-business e-commerce just like Microsoft dominates office software. Dozens of e-commerce companies -- including main rivals Ariba, Commerce One and i2 Technologies -- disagree with Ellison.

Lane's best asset to Oracle may have been the "balance" that Epifanio highlighted. When Ellison would get ahead of himself, Oracle had strong lieutenants to tone things down. A 1999 interview with Oracle chief financial officer Jeff Henley illustrates the point.

Ellison's recently appointed lieutenants are unproven when it comes to deconstructing their outspoken leader. Ellison created an executive team -- executive vice president of operations Gary Bloom, Henley and executive vice president Safra Catz -- to help manage Oracle's day-to-day affairs. Of that group, only Henley has the clout to tone down Ellison's rants.

And it's not a one-man job.

Wall Street clearly doesn't want to backpedal. Just about a year ago, Oracle used to miss every other quarter,

Wall Street wants to believe those days are over.

There's no need to worry -- yet. But Oracle can't afford to misfire, or mismanage Wall Street. IBM, Microsoft and SAP are all ready to battle Oracle.

If Ellison delegates well and manages expectations, Oracle will do fine. If not, you can expect a rocky stock chart. In either case, we won't know what Oracle will look like until it reports its fiscal first quarter earnings nearly three months from now.

Epifanio said he will wait for next quarter's performance and guidance and detailed management succession plans before revisiting Oracle shares. That may turn out to be good advice.

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN...
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